Quick Summary
The Government has proposed a major overhaul in the manner penalties for under-reporting and misreporting of income are imposed under the Income-tax law. As per the proposed amendments, penalty under Section 270A will now be levied directly within the assessment order itself, instead of being initiated and concluded through separate proceedings. Existing Framework Leads to Multiple Proceedings Under the current provisions of the Income-tax Act, penalty proceedings follow a multi-stage proces
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FAQ :
The proposed amendments will be effective from 1st April 2027 for assessments made on or after this date.
Penalties will now be imposed directly within the assessment order itself, replacing separate penalty proceedings.
Yes, interest under Section 220(2) will only be charged after appeals are disposed of by the CIT(A) or ITAT, offering relief during appellate processes.
The main benefit is to simplify tax administration, reduce the multiplicity of proceedings, provide more certainty to taxpayers, and resolve penalties faster.
Consequential amendments are proposed for the DRC to align its role in reducing or waiving penalties with the new framework where penalties are part of the assessment order.
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